Best Steps, Considerations For Your Succession Plan

When it comes to succession planning, healthcare organizations can sometimes be their own worst enemies, especially those with no plan at all. Such is the case with a multi-million-dollar, single-specialty group that is reeling after an unfortunate dilemma of its own making.

The group was smack in the middle of several joint ventures, interrelationships, and already-approved large acquisitions when members of the group managed to run off the CEO — the driving force behind these ambitious endeavors — before the deals could be closed.

“He was a great guy,” recounts Randy Bauman, CEO of Delta Health Care in Brentwood, Tennessee, who is well-versed in the arena of succession planning. “They didn’t fire him, but they did some things that really upset him, and because he was in his 40s and highly marketable, he said, ‘You know what? I’m not going to put up with this.’ So, he left, and he left them in the lurch.”

Devoid of even the pretense of a succession plan, the fallout from his departure was as predictable as it was crippling to the group.

“They were desperate [for a replacement],” Bauman says, “so they brought in this guy who had done some strategic planning for the CEO — a professor-type. And you could just see the writing on the wall. If the group survives this it will be a miracle, and that’s the downside of not anticipating succession planning, or in their case maybe not appreciating what they already had [in their CEO], but they made their own bed, and I fear that the whole group may unwind before the situation is over.”

However extreme this case might seem, it illustrates the potential danger that awaits healthcare organizations that put off succession planning until it’s too late.

The good news is, it’s not too late to start a succession plan now. And here’s how: The American Association for Physician Leadership, through the expert advice of seven healthcare executives and consultants, has compiled a guide for best-step considerations for those interested in implementing or enhancing their own succession planning.

When To Begin Planning

If you’re a true servant leader, succession planning begins the day you assume a leadership position, Thomas Zoch, MD, FACP, FACEP, CPE, suggests. Involved with succession plans at several healthcare institutions over his 35-year career, Zoch immediately launched into another in 2017 as a new vice president with Ascension Wisconsin.

“When I assume a new role,” Zoch says, “from day one I start to think about who would be a good successor because I’m going to do the best I can, but I cannot last forever in this role.”

Sadly, he adds, he’s watched leaders, especially at smaller practices, who believe they’re going to last forever, assuming, “By golly, I built this company, and no one’s going to take it away. It’s my way or the highway.”

“That’s where the true concept of servant leadership comes to the forefront,” says Zoch, describing a “follower-focused” approach in which leaders value, trust, care for, and groom individuals to become their successors — and not just to do the job as well as they do it but to do it better.

That’s sometimes easier said than done, admits Tim Boden, CMPE, executive director at a multi-specialty practice in Mississippi, where his goal is for the practice to be so successful and self-sufficient that it no longer needs him.

“And, really, that’s what it’s all about,” he says. “My primary job is your success, and I expect your success to include the success of those who report directly to you. That is a culture that is perfect for succession planning. And when the culture is healthy, I’ll guard it with my life, and when it’s unhealthy I’ll do everything I can to modify it.”

The biggest obstacle to this altruistic approach? Usually egos.

“You’ve got to get out of whatever messiah complex you’re laboring under, whatever rock-star idea, dream, or majesty that you’re carrying out, and learn that no organization is going to be healthy if it depends too heavily on one individual,” Boden warns. “If that individual gets hit by a bus tomorrow, you’re up the creek. So that’s the first thing: Egos have got to be checked at the door.”

“It takes the heart of a servant leader,” Boden continues, echoing Zoch’s familiar refrain. “It takes the heart of someone who says he’s part of something bigger than himself or herself.”

As current director of an independent practice that opened in 1963, Boden encourages his physicians to accept that the practice is bigger than them and to embrace and embody self-sacrifice by identifying opportunities to coach colleagues, serve as role models, and set up others for success.

“And let me tell you,” Boden says, “that’s tough.”

So, why does he persevere? Because of his desire to retire and to remain retired, and for the practice to succeed long after he leaves.

“To me, that’s my legacy,” he says. “That’s what I leave behind.”

Components of Succession Planning

Other components and considerations for effective succession planning include:

Review your business plan strategy: Begin here, Boden advises. “Look at your business plan, your resources, at elements that affect your timeline, and all of those things will help you form that initial succession strategy.”

It’s a process that includes assessing current leadership, listing priorities, identifying needs (including personnel, based on anticipated departures or projected organizational growth), and creating a culture of trust that allows for better planning by encouraging open discussion without fear of reprisal if, for example, someone wants to return to school or eventually move on.

“They’ve got to know that you’re going to encourage them both within and outside the organization,” Boden stresses.

Provide consistent communication: This builds on the trust factor. Maintaining open, relational communication makes it easier to identify which providers are staying, slowing down, ready for part-time work, or leaving.

“As an administrator I would tell a physician leader: That’s your job,” says Jennifer O’Brien, a practice management executive for more than 30 years. “That’s what I did as an administrator, and it was never a surprise when a physician told me, ‘I’m getting ready to retire’ or ‘I’m getting ready to write my notice letter.’ Does that mean you know when the wife is going to run off with the tennis pro? No, but you make an effort to understand where they are in their life, and the only way to do that is to communicate, listen, and be involved.”

Empower physicians to lead: Sarah Krevans, CEO of Sutter Health in Northern California, suggests that the earlier you start your succession plan and the deeper into the organization you go with physicians, the better. Tying back to consistent communication, she emphasizes the importance of knowing and understanding every physician coming into your system, including their interests and how to involve them in ways that are most meaningful to them and that fit with their ability to practice medicine.

“Day to day, every physician in the organization is a leader,” she says. “They might not have a formal title, but in their care center, in their care team in the hospital unit, they are looked up to as a leader, and so how do we tap into that? How do we help them with that? How do we nurture that? And for those who’d like to move into more formal leadership roles, how do we know about that? Because sometimes there are perceived or real cultural barriers to people putting themselves forward, and so the more you know about their goals and desires early on the better.”

Create staff timelines: O’Brien was consulting for a 25-physician orthopedic surgery group when she discovered that nearly half the staff would be turning 65 within 10 years and that the buyout formula would likely collapse the group with so many of them simultaneously approaching retirement.

“So, we plotted a timeline, and the physicians, upon seeing that in a very visual way, committed to actively recruiting younger doctors within each subspecialty to extend the lifespan of the practice. And then we revamped the buyout formula completely.”

Create recruitment timelines: How long does it typically take to recruit for each specialty? “If you’ve got three rheumatologists retiring in the next year or so, you should have already gotten on that because it takes a while to recruit that position,” O’Brien cautions. Other specialties might not take so long to recruit, but the lesson is this: Know the average duration for completing recruitment in each specialty or subspecialty and plan accordingly.

Take advantage of assessment tools: Do these tools work? Quint Studer, founder of the Studer Group, a renowned healthcare consulting company, tells the story of a CEO who was strongly considering his COO — exceptionally charismatic and a good communicator — as his eventual successor. Still, wondered the CEO, “Is this the right person?” A resounding “yes” was the answer from those who knew the COO well. “So, I talked him into using an assessment,” Studer says, “and found out this person was in the first percentile of problem-solving.” The CEO’s instincts affirmed, he moved to another candidate.

Studer says assessments are critical in determining who can excel at the next level. “Somebody might be very successful in the role they’re currently in,” he says, “but do they have the potential to step it up? And if they do, how do I help support them? I think that’s a great miss right now in healthcare — not using tools that are available.”

Maximize metrics: Failure to include assessments and performance metrics in the promotion process considerably increases the odds of a promotion being a mistake, not to mention the subsequent headaches that come with trying to fix that mistake.

“Ironically, [healthcare organizations] have great measurement tools for some things,” Studer says, “but when it comes to leadership performance, they can be pretty weak.” At top health systems like the Cleveland Clinic, Kaiser Permanente, and the Mayo Clinic, he notes, “you basically couldn’t promote someone to top spots if they didn’t have performance metrics behind them.”

Hire a psychologist: “If I’m a CEO looking at succession planning, besides training and metrics, I’m using an organizational psychologist to make sure I don’t put a person in a job where they won’t be successful,” Studer says.

Is a psychologist really a wise investment? A necessary expense? In the long run, yes and yes, not only in assessing candidates for development, promotion, or hire, but for shaping the process for succession planning specific to the needs of that organization, says Chris Reilly, an industrial psychologist who’s worked with Studer and has consulted on succession planning for 30 years.

“The first thing we want to do is understand their company, their current structure, and who they have in place,” Reilly says. “What are the conditions in the market shaping the future? Are they planning on growing or just maintaining? Because all of that will impact the actual succession plan.”

Motivate through opportunity: The notion that one should always be on the lookout for his or her successor, as Boden suggests, may sound counterintuitive to many unless endorsed to others as an opportunity for their own advancement: “Look for your replacement … so I can promote you.” Be deliberate, he advises, or human nature will take over and revert to survival mode.

“Nobody’s motivated if they don’t see something in it for themselves,” he says, yet admitting the message doesn’t always fall on fertile ground. “A lot of people don’t have the emotional intelligence or the inner strength to be able to handle that.”

Implement leadership programs: Studer notes that most of the nation’s premier healthcare systems develop their leaders internally: “All of them have a wide, aggressive, robust leadership development [program] that creates a wider pipeline than others. That’s really the key.” But opportunities to learn and grow exist even in smaller practices with far fewer resources, where delegating responsibilities — introducing staff to new leadership skills, no matter how unfamiliar or uncomfortable it might make them — can be leveraged as teaching moments.

Cast a broad net: Unfortunately, Studer says, some organizations identify potential successors based on politics, seniority, personalities or maybe because someone “reminds them a lot of themselves” and less because of performance or measured growth potential. The mistake is when four or five candidates are “somehow identified” for leadership development at the exclusion of other potentially superior candidates. In doing so, says Studer, “I think they miss so much talent.”

Use physicians recruiting physicians: There is value in physicians and their organizations having good relations with local training programs because, O’Brien believes, physicians are the best at recruiting physicians.

“It’s like poetry in motion when a physician in my group identifies somebody they think will be a good addition to our group,” she says. “And then I follow up with a series of interviews and meetings so they can get to know the practice. I do the administrative part, but when physicians identify younger, newer physicians coming out of training, that just works so well.”

Avoid compensation conflict: Consider this scenario, Krevans suggests: A group moves a primary care physician into a leadership role with the idea of continuing to pay them at a PCP rate — then does the same with an orthopedic surgeon, but pays them at an orthopedic surgeon rate.

That can feel fair, Krevans argues, until those individuals realize, “Wait, we’re doing basically the same work and one of us is making twice as much as the other.” It’s a conflict that can be avoided with up-front conversations, she says, explaining that you don’t want a manager making a commitment to a physician “without understanding that we’re not going to be able to [match salaries] as a not-for-profit because we always need to lean into an independent view of what is fair and appropriate.”

Expect additional departures: Organizations that focus primarily on succession plans for the CEO position do so at their own peril. Why? “Because we forget that when he or she leaves, many times other C-suite members follow,” Zoch says. Whatever the reason — perhaps loyalty to the CEO or the change of circumstance that prompts a decision to retire — the numbers support this assertion.

When healthcare CEOs step down, about 40 percent of CFOs, 35 percent of COOs, and 25 percent of CNOs follow suit. “That could be a bad spot if one doesn’t plan ahead,” Zoch says.

Lead by example: Zoch calls it the “multiplier effect, when a program continues to grow and excel as a result of a well-conceived, well-executed succession plan; when there’s a selfless and cascading sharing of leadership skills; “when I pass these leadership abilities onto young leaders who then pass that on to their colleagues in the front line, who then pass that on to [the benefit of] their patients and their respective families,” Zoch says. “And the ultimate benefit is that it leads to lives saved. As a result, there’s much at stake in healthcare when we talk about the succession plan.”